The Bank of Canada raised interest rates aggressively for the sixth time in a row, while hinting that it may pause its rate hike cycle.
The prime rate rises to 6.45% as a result.
A homeowner with a variable-rate mortgage can expect to pay approximately $28 more per month per $100,000 of mortgage for every 50 basis point increase (0.5%).
On Wednesday, policymakers led by Governor Tiff Macklem raised the benchmark overnight lending rate by 50 basis points to 4.25%, the highest level since the beginning of 2008. The move was consistent with the expectations of a slim majority of economists polled by Bloomberg.
“The Governing Council will consider whether the policy rate needs to be raised further to restore supply and demand balance and return inflation to target,” the bank said in a statement.
Deputy Governor Sharon Kozicki’s speech and press conference on Thursday may shed more light on the bank’s thinking heading into 2023.
Looking ahead, the Governing Council will consider whether the policy interest rate should be raised further to restore supply and demand balance and return inflation to target. The Governing Council is still assessing how tighter monetary policy is slowing demand, how supply challenges are being resolved, and how inflation and inflation expectations are responding. Quantitative tightening is supplementing policy rate hikes. We remain committed to meeting the 2% inflation target and restoring price stability to Canadians.
The next announcement of the overnight rate target is scheduled for January 25, 2023. At the same time, the Bank will publish its next full outlook for the economy and inflation, including risks to the projection, in the MPR.
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